28 Sep National Hispanic Heritage Month: Hispanic-Owned Businesses and Supplier Diversity

National Hispanic Heritage Month (September 15 to October 15) has its roots in 1968 and celebrates the heritage and culture and recognizes the generations of Hispanic and Latino Americans who have positively influenced and enriched the United States.

The timing of the Month – the latter half of September and the beginning of October – signifies the independence anniversary of several Latin American countries. September 15th is the independence day for El Salvador, Guatemala, Costa Rica, Nicaragua, and Honduras. The extension of the commemoration later included the independence days of Mexico (September 16th), Chile (September 18th), and Belize (September 21st). (burlingtonnc.gov)

Many organizations will honor the month by highlighting the stories and accomplishments of Hispanic and Latino pioneers in their industry and within their organizations. Of course, being inclusive and recognizing contributions by everyone within the workplace is important year-round, as part of a comprehensive DEI strategy. That said, internal employee programs and external events and marketing during Hispanic Heritage Month also provide opportunities for engagement and awareness.

The focus outlined above highlights people working within an organization. Hispanic- and Latino-Americans are also a driving force in the US Economy as entrepreneurs building their own organizations.

Nationally, according to the US Small Business Administration, here are the facts about Hispanic- or Latino- Owned Businesses:

• Nearly 1 in 4 new businesses in the US are Hispanic-owned.
• The almost 5 million Hispanic-owned businesses in the US contribute more than $800 billion to the American economy annually.
• Hispanic employer businesses employ around 1 million workers, with more than $100 billion in annual payroll.
• The number of Hispanic-owned businesses that employ at least one employee other than the owner increased by 14% between 2012 and 2017 – more than twice as fast as the national average.
• In the decade preceding the pandemic, the number of Hispanic business owners increased 34% compared to an increase of 1% among non-Hispanic business owners.

The number of Latino-owned businesses has grown 34% over the ten years prior to the pandemic (compared to an increase of 1% among non-Hispanic business owners). And those businesses have grown revenues at an average of 25% per year.

However, ”only 51% of Latino-owned businesses received approval for their loans, whether partially or completely, in comparison to the 77% of White-owned businesses that were approved,” according to research from the Latino Business Action Network. That may mean that Latin-owned businesses often use personal or business lines of credit to finance their businesses, exposing them to greater personal financial risk and impacting overall scale and growth.

For larger corporations, understanding the potential and challenges for smaller businesses can inform a vibrant and effective sourcing plan. Here are three ways to support that.

1. Have a Diverse Supplier Strategy/Plan

Stop saying that there are no diverse suppliers to provide the products and materials that you need. Clearly, from the statistics, there are plenty of Hispanic-owned businesses in the US. Expand your networking and outreach. Join Hispanic Chambers of Commerce. These are all ways to grow and diversify your potential pool of suppliers.

2. Ask Your Current Suppliers about Their DEI Initiatives

Regardless of the status of your current suppliers, you can hold them accountable for DEI measurements, such as hiring, leadership, and organizational culture. And if your contracts allow your suppliers to use subcontractors, ask them about how they recruit for MBEs, WBEs or DBEs.

3. Have a Solid Onboarding Program Once You Do Source New Contractors

   Just as a diverse hiring strategy doesn’t guarantee engagement and inclusion once people start work, awarding a contract to a minority-owned business is also not the final step of a solid, sustainable program. Consider how you will onboard your new contractors, both so they understand your processes and culture, and also to help them build capacity with ongoing support mechanisms.

   According to global consultancy, Bain & Company, “Diverse suppliers often are smaller businesses that require support to succeed and grow. One of the key reasons supplier diversity initiatives flounder is that organizations underinvest in the capabilities required to support new or developing suppliers, including onboarding, risk mitigation, and mentoring. In-house coaching is critical because each procurement organization’s requirements are unique.” (baine.com 2021)

 Supplier Diversity is Good for Business Performance

According to Bain & Co., “a growing number of executives confirm that a diverse supplier base improves business performance too.” UPS, Target, Pacific Gas and Electric, and other leaders have been building more diverse supplier pools for decades, a move that benefits their bottom lines and reduces supplier turnover. “Small and diverse suppliers are very often more innovative, more flexible and more efficient,” says Kris Oswold, vice president of global supplier diversity at package delivery company UPS, as reported by Reuters. “We want the best suppliers to compete for our business, so it is worth a little extra effort to go find these and help them develop.” (Reuters, 2020)

Interested in knowing more about how to include a robust supplier diversity program into your overall DEI Strategy? We can help. Contact us today to get started.

Additional Resources on and for Hispanic- and Latino-Business Owners

Batra, Radhika et al. Supplier Diversity: How to Overcome Four Key Obstacles. (April 28, 2021) https://www.bain.com/insights/supplier-diversity-how-to-overcome-four-key-obstacles/

DeLaGarza, Isabella, Highlighting Hispanic and Latino Entrepreneurship. (September 22, 2022) https://www.burlingtonnc.gov/2458/Highlighting-Hispanic-and-Latino-Entrepr

Richens, James, Why diverse suppliers hold the key to business resilience. (October 6, 2020) https://www.reutersevents.com/sustainability/why-diverse-suppliers-hold-key-business-resilience

Ludwig, Sean, US Chamber of Commerce: Resources for Hispanic Owned businesses. (July 30, 2020) https://www.uschamber.com/co/start/strategy/resources-for-hispanic-owned-businesses